By Chris Hitch, Ph.D. & Rick Rocchetti
In the first part of this series, What Are You Getting Yourself Into? we examined how to get your bearings straight in a new position. Now, we’ll discuss the next steps in your integration into that new role.
THE STARS MODEL
In his book The First 90 Days,2 Michael Watkins describes the predictable life cycle of organizational units. Using what is referred to as the STARS Model, Watkins highlights the typical stages in the evolution of an organization, from startup through turnaround, accelerated growth, realignment, and sustained success. The model is useful as a tool for those entering new positions to help assess their new situations. Below, we examine four of the key stages and their characteristic polarities.
1. Start-up. Start-ups occur whenever there is a new product or service launch. It can involve a new product or service brought to the market, opening of a new location or site, or an entirely new element added to the organization. Entrepreneurship, bootstrapping, innovation, and rapid prototyping are the overarching principles in start-ups. You are starting from scratch, working on minimally viable solutions, looking for customers, and eagerly listening to and responding to customers. It’s a heady time.
Some of the organizational polarities a new leader in a start-up faces are:
- Speed versus quality
- Flexibility versus structure (might be change versus stability, too)
- Doing versus learning/thinking
- Quick decision making versus thoughtful decision making
- Cost versus quality
2. Turnaround. If your new service or product succeeds, you can move up the curve to accelerated growth (see next stage). But if not, you face a turnaround situation. Watkins notes that the biggest difference between a turnaround and a realignment situation (see later stage) is the level of urgency. There is significantly more urgency to act and do something in a turnaround situation than in a realignment situation. To stop the bleeding, you have to simultaneously determine why the product or service is less or no longer relevant, and you must rally your team toward a new goal. This is the essence of change management.
Several polarities may be at play during a turnaround:
- An overfocus on stability at the expense of change;
- An overfocus on a long-term perspective at the expense of the short term; and
- An overemphasis on “what we’ve always done” (traditionalist) at the expense of trying something new (pioneer/innovator).
A key polarity may also be whether you are an insider or an outsider. If you are an insider, you have likely been promoted or have come from a successful unit elsewhere in the organization. This gives you both advantages and disadvantages. You already know the organization and its overall strategy. You have a sense of the key team members; at the same time, your team (unconsciously) will likely expect no significant shift in operations and strategy, as you were selected internally.
If you are an outsider, your team (unconsciously) will anticipate significant changes in operations and strategy. You also have a different set of eyes to diagnose the operation and its alignment with corporate strategy.
3. Accelerated growth. The best possible outcome from the start-up or from an existing product or service is to be flooded with requests for more of that service or growth. Your success starts small, and then grows geometrically. This is the “hockey stick” chart formation that all senior executives, owners, and shareholders salivate over. But you need to acquire more resources, develop ways to expand efficiently and effectively, bring more people on board, install efficient systems for delivery, and look to expand market share.
Polarities at this stage include:
- Customer care versus employee care. If you focus too much on taking care of the customer, you risk losing your employees. Currently, health care providers are experiencing this polarity. Up until now, most health care institutions defined these needs as separate problems, not as a polarity, and they have struggled to improve both simultaneously (and not overly successfully).
- Control versus empowerment. You want to ensure that systems are in place to maintain quality and sustain the performance metrics that have made the product or service successful, while empowering those closest to the customer to accelerate growth even further.
- Centralization versus decentralization. You need to determine which decisions should be made at the organizational level and which at the unit level.
- Short term versus long term. Should you focus on growing revenue (top-line growth) with less regard for gross margin (profitability or bottom-line growth)? Should you discount some of your idle assets to generate maximum revenue, or does that set a dangerous precedent for expected future discounts?
4. Realignment versus accelerated growth. You have an existing product or service that’s performing well but has hit a plateau of growth and/or profitability. There’s something changing in the market, but it’s hard to place a finger on it. Current or potential clients may want something different, but they continue to buy from you until you start to see market share, revenue, and or margins erode. You have to take action, but simultaneously you have to assure your team that “everything’s going okay—we’ll ride this out and come out better.”,3
Some polarities that characterize this stage are:
- Internal versus external focus. There’s overfocus on internal value at the exclusion of focus on the external market.
- Current versus future clients and markets and new entrants in the marketplace.
Have you observed these stages yourself, or perhaps used a different approach when entering a new position? Please share below!
Originally Published by Wiley Online Library: Employment Relations Today (Volume 42, Issue 4)
2. Watkins, M. (2003). The first 90 days: Critical success strategies for new leaders at all levels. Boston, MA: Harvard Business School Press.
3. The GPS-device market is an example of this. There was rapid growth in the beginning, but producers were unable to see signs of developing technology for smartphone application. The later innovation initiated a downward spiral, resulting in another inflection point turnaround or shutdown/divestiture.
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